Appendix 8.1: Audit and Assurance Committee Terms of Reference February 2021

2.1.1   To review and report to the Board on, significant financial reporting issues and judgements made in connection with the preparation of the Group’s financial statements, interim reports, preliminary announcements and related formal statements.  

To recommend to the Board the approval of the financial statements as a result of the Committee’s review of: 

• • The appropriateness of accounting policies and any changes to them. 
  • The methods used to account for significant or unusual transactions where the accounting treatment is open to different approaches. 
  • The disclosures in the financial statements and consider whether the disclosures made are set properly in context.  
  • The related information presented in the financial statements, including the strategic report, corporate governance statements and statements relating to audit and risk management. 

2.1.2 To receive periodic assurance reports (both management and independent) on the completeness and accuracy of the organisation’s management accounts and the accuracy and timeliness of financial returns submitted to the Regulator.

2.2.1 To oversee Housing 21’s relations with the external auditor: 

• To conduct a comprehensive review of the performance of the external auditor annually establishing whether there is need for a new appointment making a recommendation to the Board in this respect.   
• To advise the Board on the process for external auditor appointment, initiate and participate in the selection process, which should be not less frequently than every five years, unless otherwise agreed with Board. 
• Agree the audit fee and scope of the audit, ensuring no non-audit work or services are carried out by the External Auditor. 
• To consider and agree the audit plans with the external auditors prior to the commencement of the annual audit. 
• To consider with management the content and sufficiency of disclosure in the annual financial statements of the Group and to make recommendations to the Board as to the reasonableness or otherwise of the accounts. 
• To discuss and agree the detail of management letters and letters of representation with the external auditors. 
• To ensure that appropriate remedial action is taken to address any identified weaknesses in control raised by external auditors within the time limits that management have agreed with the auditors. 
• To meet privately with the external auditors at least once a year to review: 

• • The quality of the internal control systems. 
  • The content of the annual financial statements and the external auditors report thereon. 
  • Issues raised in management letters and responses. 
  • The efficiency and effectiveness of the audit process.  
  • Other areas of concern. 

2.3.1 To ensure that Housing 21 has an effective and efficient internal audit service and to review the effectiveness of the service annually including: 

• Approving the scope of planned internal audit activity having considered the organisations overall assurance framework, ensuring scope adequately covers key areas of risk and organisational activities.  
• To ensure that there are sufficient and appropriate resources available to complete the plan of activity. This includes reviewing the effectiveness of co-sourced model of supply and considering the tender arrangements for the provision of externally provided internal audit services. 
• To receive and consider internal audit reports and ensure that appropriate remedial action is taken to address any identified weaknesses in control within the time limits that management have agreed with the auditors. 
• To commission special investigations as appropriate in response to areas of concern. 
• To report to the Board matters of significant internal control weakness and or non compliance with Regulatory Standards and Law that it is aware of. 
• To meet privately with the internal auditors at least once a year to review: 

• • The quality of the internal control systems. 
  • Corporate conduct. 
  • Any areas of concern which may impact on the independence of the audit service. 

• To ensure a comprehensive Assurance Framework is in place reflecting the three lines of defence. Reviewing the framework annually to identify assurance requirements.  
• To recommend to the Board the approval of an appropriate Risk Management Policy and Framework which takes into account the Board’s risk appetite.  
• To review the outcomes of the risk management processes reporting to the Board on its effectiveness,   
• To conduct regular “deep dive” exercises on key areas of strategic importance or risk (including governance, financial, social impact,  and regulatory compliance), as it sees fit or as directed by the Board, to ensure appropriate assurance is in place over the effectiveness of related internal controls. Reporting to the Board matters of significant weakness and or non compliance with Regulatory Standards and Law that it is aware of. 
• To review the policies and procedures of the organisation in relation to fraud and whistleblowing (in accordance with the Public Disclosure Act 1998) at least once per annum or as may be required 
• To review Housing 21’s fraud register at least once per annum or as may be required. 
• To receive reports on and review all cases of actual or attempted fraud and ensure that appropriate action has been taken. 
• To review the policies and procedures of the organisation in respect of Data Protection and Cyber Security once a year. 
• To receive reports on and review cases of data protection incidents. 
• To review annually the assessment of Housing 21’s compliance with Laws and Regulations. 

2.5.1   To receive assurance reports on Housing 21’s policy framework which ensure appropriate reporting to Board or relevant Committees takes place on relevant policies 

2.5.2 In addition to the specific reports outline above, to report annually to the Board on the effectiveness of the Committee and the overall effectiveness of arrangements for:  

• Internal operational control;
• Financial control; and  
• Risk management;  

2.5.3 To consider any other matters referred by the Board and Committees, monitoring on behalf of the board where directed, any action plans put in place to correct compliance issues. 

3.1  A minimum number of members of the Committee shall be three, of which one should have recent, relevant financial experience. There will be a maximum number of five members of the Committee, including no more than two co-opted committee members. Members of the Committee will be appointed by the Board and shall not include management. Co-opted Committee Members can be appointed as deemed necessary. 

3.2 The Chief Finance Officer and Director of Audit, Assurance and Governance will have a standing invitation to attend the Committee. The Committee will request the attendance at Committee of any member of employees to explain issues arising or remedial action in respect of an internal/ external audit report or risk action which remains outstanding. 

3.3 There is an open invitation for both the Chair of the Board and Vice Chair to attend occasionally. However, neither will Chair the Committee and they are in attendance as a non-voting member. Their attendance does not count towards quoracy. 

The quorum for meetings will be three Committee Members, at least two of whom must be a Board Member. 

There will be a minimum of four meetings held per annum  the dates of which are to be agreed with the Board but may be amended from time to time by the Chair of the Committee. 

Committee members should have or ensure that they have access to the following range of skills, experience, knowledge of and a general understanding of: 

• Finance 
• Risk management 
• Internal control 
• Care and support 

The Committee shall have full authority to commission any reports or surveys which it deems necessary to help it fulfil its obligations. 

Representatives of both External and Internal Audit have the authority to liaise directly with the Chair of the Committee on matters which they consider to be important. 

The Committee will review these terms of reference, including membership, annually.